Friday, April 13, 2007

Timer Digest Change of Market Bias: Going Neutral Tonight

Timer Digest Change of Market Bias: Going Neutral TonightSocialTwist Tell-a-Friend
Fari Hamzei

About 6pm PDT today, I informed Jim Schmidt of Timer Digest, by email, that I have elected to change my market timing bias from LONG to NEUTRAL.

We have prepared a video to explain the reasons behind this change. Due to size limitations imposed by our video distributor,, it is in eight parts.

Video Part 1

Video Part 2

Video Part 3

Video Part 4

Video Part 5

Video Part 6

Video Part 7

Video Part 8

Thursday, April 12, 2007

NYSE and NASDAQ Markets

NYSE and NASDAQ MarketsSocialTwist Tell-a-Friend
Tim Ord

The NYSE Market:
Below is the NYSE McClellan Summation index and the McClellan Oscillator dating back for three years. The NYSE market becomes overbought when the Summation index reaches above +3500. The Summation index has been in the +3500 range since last October which implies the NYSE has been overbought since last October. Tops form on the NYSE when the NYSE makes higher highs and the Summation index makes lower highs. Recently the NYSE just tested its previous high of late February and the McClellan Summation index is making a lower high for the third time. The next time the NYSE Summation index turns down it will mark the top in the NYSE.

The NASDAQ-100 market:
A similar bearish setup occurred for the NDX. However, we believe a top is in for this index. There is a gap on the NDX near the 1808 level and that level is being tested on much lighter volume and triggering a bearish signal. Therefore is unlikely NDX will rally through the gap level which implies the February high will be the top. The same bearish scenario is present with the NDX McClellan Summation index as with the NYSE McClellan Summation index. The NDX made higher highs as the Summation index made lower highs. After the second lower high turned down on Summation index as the NDX made higher highs produced the sell signal. This sell signal was triggered near the February high. Strongest part of the decline may come when the Summation index turns down the next time.

Timer Digest Commentary -- My 2 Cents

Timer Digest Commentary -- My 2 CentsSocialTwist Tell-a-Friend
Fari Hamzei

A very wise woman once told us at a Southern California Technical Analysis meeting: "Trust Your Indicators" (keep that in mind as you read further here).

Well -- Tax Selling started early this week with the FED minutes showing the concerns for future core inflation is on the minds of Board of Gov. of FRB.

I would add this, if the rally we have witnessed from Mid-March was based on a FED rate cut assumption, then with today's release of FED Minutes, further wash out is a given.

Brace yourself and get rid of your least desirable stocks. Keep in mind, the daily and weekly trends are still up.

Editors' Note: This was filed with Timer Digest on April 11th, half an hour before the cash market closed.

Wednesday, April 11, 2007

Equity Index Update

Equity Index UpdateSocialTwist Tell-a-Friend
Brad Sullivan

The index markets continued to trade in a narrow range with a sustaining bid underneath the current pricing zones. Activity was light as volume flows are running at a -30% clip in some of the indices versus their respective YTD averages. This afternoon will bring the release of the Minutes from the last FOMC meeting and should spark some bit of trading activity. In addition Dr. Bernanke will speak in Washington and Richmond Fed President Lacker will speak on the economy in Charlotte. Given the lack of movement, I have included 5 charts today, 4 of which are focused on the MA % differentials since the start of 2007. The other chart continues to show the strong correlation between the YEN and SP.

Monday, April 9, 2007

Bond Market

Bond MarketSocialTwist Tell-a-Friend
Sally Limantour

Friday’s non farm payrolls number was a bit of a shock and has dashed any hopes of a rate cut in the near future. Revisions of the past two months were strong and the unemployment rate fell to 4.4% matching a low back in May 2001. Interesting too was the strong leap in construction employment in an industry that has negative headlines on a daily basis. Remember that February’s number was quite negative and the 56,000 new jobs created in March construction is most likely an adjustment. The important thing is the trend and the direction for the past three months in construction employment is still down.

As of April 3rd the COT report showed the spec and fund combined net short position of
126,351 bond contracts. We have to assume this position is larger as the market is a full point lower now and it will be important to see the COT report this Tuesday. The 109 level I have been looking for in the Treasury bond futures (USM7) is close at hand and although the COT reflects a large short position amongst the spec community, bond prices can still go lower before a good bounce. In fact, many times I have seen bond prices move an additional 3-4 points even with an extreme COT position.
Talk of interest rate cuts will now be on the back burner as the Fed will remain on hold. Inflation is ticking up and having just returned from the Bahamas where I attended the Natural Resource Summit of the Americas, I am still convinced we are in a major bull market in commodities and this sector will outperform. It is both a supply and demand issue in many of the raw materials and we should see opportunities ahead in the base metals, precious metals, molybdenum (try saying that word three times fast) uranium, energy, alternative energy, water supplies and food. This is a theme I will continue to cover and focus on both in futures and the natural resource stocks.

Looking ahead in bond land this is a slow data driven week with the biggest news coming on Wednesday as the FOMC releases the minutes from March 21. Following this we have Chicago Fed Moskow speak about the US economy, then Thursday’s chain store sales and Friday’s report of the PPI, the Uni. of Michigan Consumer Sentiment and the international trade numbers for February. It is not inconceivable for the 30 year Treasury bonds to trade back to long term support at 108.00.

Equity Index Update

Equity Index UpdateSocialTwist Tell-a-Friend
Brad Sullivan

The index markets rallied off the surprisingly strong Non-Farm Payrolls data released on Friday morning. The SPM7 contract settled the trade at 1458, up over 5pts on the session. This morning our domestic market will be open, however, the DAX, FTSE and CAC are all closed and volume flows should be dramatically reduced.
As for the employment report, the headline reading was +180k versus expectations around -30% lower. In addition, the rate of unemployment dropped to 4.4% and revisions for the last two reports were sharply higher than anticipated. The true damage done was in the short end of the yield curve, where Eurodollars were hammered lower by -10 to -16 basis points in their shortened trade. The long end held up marginally better, but still finished with significant losses on the session. The dollar was able to rally against nearly all the major currencies.

The question on the board now becomes this…if the index rally from our recent lows has been predicated (at least partly) on lower rates, what happens now that the cut appears off the table in the short run? My suspicion is nothing that would take us lower. I think the marketplace was much more concerned with any Sub-Prime leftover worries a couple of weeks ago during Fed speak. When those fears were not shared with the FED, the indices took off to the upside. I would argue that most of the longs have been building positions based on the continued global economic expansion (Copper anyone?). However, there are two potentially damaging issues that the indices must overcome to gain any territory from the current pricing.

The first issue is the breaking of the staircase rally since the July ’06 retest of the 1225 level in SPX. The violence of that break in February remains and it materially changed the steady low volatility environment players had grown accustomed with trading. If this move is nothing more than a retest, late April and early May could prove to be a velocity driven trade on the downside in equities.

The second issue facing the marketplace is the erosion in the Money Center Banks and Broker/Dealers. These issues have been “liquidity” leaders for the current bull move and right now they are flashing caution in the near term.

Finally, with Europe on holiday today, trading should be thin and quiet. I would anticipate at least one attempt for the SPM7 to trade towards the 1453 zone, which is where the index was moments before the employment release. 1454.50 to 1457.50 should provide a choppy “no fly zone” throughout the rest of the session.

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